I received an inheritance from my grandparent. Do I need to report this?
You usually don't include your inheritance in your taxable income. However, if the inheritance is considered income in respect of a decedent, you'll be subject to some taxes.
Income in respect of a decedent includes gross income items that would have been taxable to the deceased person. However, these items weren't included on the final return. The items include:
- Employee compensation
- Benefit plan distributions
- Partnership income
- Interest and dividends
- Gain on sale of property
- Crops and livestock
- Installment obligations
If you received one of these, you must report it as income. Report it the same way the deceased person would have reported it.
However, if the estate reported the income in respect of a decedent, you don't need to report it as income.
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